Is the technical stabilization of the Turkish lira (USDTRY) sustainable?

After hitting a record high at USD 7.14 for 1 Turkish lira on August 12, 2018, analysts are closely monitoring the Turkish currency after Goldman Sachs‘ forecast saying that the USD 7 overshoot could trigger a deep financial crisis in the country.

Back down to USD 6 on average on August 22, 2018, the Turkish lira seems to be stabilizing and the technical analysis oscillates between neutral and buy. However, Cyceon reminds that the fundamentals of this crisis and the Turkish-American tension still exist especially after the announcement that Moscow will start delivering its new S-400 missile defense system to Ankara as of 2019, causing a little more discontent in Washington.

Cyceon adds that the rise of the Turkish lira against the dollar is a global movement that started several years ago and has been continuously accelerating for almost 3 years. It will therefore require more than a simple technical stabilization to sustainably reduce the tension on the Turkish currency.

© Chart provided by TradingView.com, add-ons by Cyceon.